With the Tax Cuts and Jobs Act recently signed into law, you’re now doubt wondering how this 2017 tax bill will affect your future taxes and wages. Infinity Financial Services in Oakland takes a closer look at how the bill will impact individuals/households and businesses in the Bay Area.

For Businesses

The top corporate tax rate – that is, the one which applies to publicly-traded companies – drops from 35% to 21% in 2018. Also, the new tax bill means significant changes for “pass-through” businesses, which are businesses that don’t file taxes as an entity (i.e. a brick and mortar business), but see their taxes passed through to the owner’s individual tax return. Most of these businesses are small businesses: sole proprietorships, limited liability companies, and the like. Under the new law, business owners can deduct 20% of their pass-through income before the income is taxed at the applicable rate. Regarding social security, employees who paid 6.2% in social security taxes on each paycheck last year will pay 4.2% in 2018, applicable to yearly incomes up to $106,800. Also, the 2018 tax bill ushers out several deductions that some businesses and workers were accustomed to claiming, such as:

It’s difficult predicting anything in this mile-a-minute, digitized world we live in, but Infinity Financial Services in Oakland has put its collective heads together, analyzed countless financial trends, and developed several predictions for the financial industry in 2018 that we feel comfortable providing to you, the reader.

The S&P 500 Will Cross 2,900

Stocks have posted gains for eight straight years (2010 - 2017), key indices have broken numerous records, and we’re clearly residing in what has become a bull market for the ages. In December the S&P 500 was up 19.5% year-to-date (YTD), an all-time high, and it more than doubled its historical annual average. Bond prices and interest rates are low, corporate earnings are strong, and the Tax Cuts and Jobs Act could considerably boost bottom lines in the corporate world, especially with certain restrictive regulations being rolled back.

There’s a lot of perks to owning a small business. Making your dreams a reality is one of them. But, every small business owner knows that it comes with some unique challenges and responsibilities. Everything is on your shoulders, from accounting to marketing and HR, it’s 100% up to you. Just when you think you’ve got everything covered, something else crosses your mind.

Retirement

You’re responsible for your own retirement planning and also might want to consider offering a plan to your wonderful employees. Many small business owners immediately start thinking about 401Ks because that’s what they’re familiar with. However, there are other types of retirement plans that fit better into the small business structure.

SEP IRA

The Simplified Employee Pension Individual Retirement Arrangement, or SEP IRA, is a variation of the standard IRA that most people are familiar with. SEP IRAs are plans where contributions are made only by the employer and are considered a tax-deductible business expense. This type of plan is perfect for self-employed individuals and small businesses with any number of employees.

Tax season is finally in full swing, but it wasn’t that long ago there was some uncertainty about what the new tax regulations were going to mean for individuals filing their taxes this year. For the most part, changes in the tax code aren’t affecting how people are filing their taxes this year but could have an impact on what happens a year from now.

What’s important right now is that individuals filing their taxes are taking advantage of every perk and preparing for the year ahead. Since there’s still a little time before the April 17 filing deadline, now is the perfect time to talk about optimizing your tax return and preparing for the year ahead with these four tax tips.

Deduct Mortgage Interest While You Still Can

Up until December 31st of last year, home owners could deduct mortgage interest on up to a maximum of $1.1 million in debt. For 2018, this rule has changed to apply only to the first $750, 000 of debt. Individuals with high end real estate want to make the most out of their deductions this year, and plan for the year ahead.

Also, if refinancing your home is on your mind, you might want to reconsider. Any new refinancing mortgage starting this year will be subject to the new home acquisition indebtedness rules.

Changes in the ATM Affect Stock Options

Exemptions for the AMT, or Alternative Minimum Tax have increased to $70,300 for individuals and $109,400 for married couples that file jointly. The fact that fewer people are subject to the AMT under new guidelines means some individuals will find they have additional stock options.

Everyone wants to save more money, but many people don’t know where to start. Infinity Financial Services, leaders in financial planning near Oakland, provides its clients with the necessary tools to get moving and never look back. In the spirit of New Year’s resolutions, here are some tips for saving more in 2018.

Make a Budget

Easiest tip first, right? Not so fast. A large percentage of Americans have a hard time creating a budget, let alone maintaining one week to week and month to month. But trust us when we say that in order to get started on saving near Oakland, a budget is a must. Start by determining your monthly expenses and recording them in a spreadsheet. Then add in expenses that don’t occur every month, like a dental checkup or car maintenance. In a separate column, list your monthly income. This type of basic budget goes a long way towards helping you plan your monthly spending and minimize overspending.

Land a great new job? Awesome. Now is the perfect time to think about your 401(k) and retirement plan, whether you had one before or not. Saving for retirement is important at all ages, so don’t let this opportunity fall to the bottom of your list.

Here are tips to consider when starting a new job and a new 401(k).

Make more contributions if you have a bigger paycheck. When you get a raise, it is a good idea to increase the amount you contribute to your 401(k). You didn’t have this money in your pocket, so you won’t miss it when you put it straight into your 401(k).The contribution limit for 2017 is $18,000. If you already meet the limit, let’s talk about whether you should consider contributing to an individual retirement account (IRA) for even more retirement savings.Don’t pass up the new employer’s match. Sometimes, employers provide a 401(k) match as part of their employee benefits package. They may match your contribution dollar for dollar or a percentage of it up to a set amount.Your company match is free money. Don’t let it slip through your fingers. If I offered you a bundle of cash – say, a few thousand dollars, perhaps – would you turn it down? Find out the limit and at the bare minimum, contribute that amount.Name your beneficiaries for your new 401(k) plan. Keep your beneficiaries consistent across all retirement accounts and according to your estate plan. So be sure to update your new plan to reflect changes in your beneficiaries.Are you now a parent or do you have a new spouse? Updates allow your 401(k) account to pass directly to the person of your choice should you pass away.Above all, don’t forget to enroll in your new plan. While this may seem obvious, it’s easy to forget signing up for your new company’s 401(k) plan, because many employers require a short waiting period before new employees are eligible to join. If you have to wait, put a reminder in place – circle the enrollment date on your calendar and set an alarm on your smartphone. Just don’t forget.Your “Old” 401(k)

Wondering what you should do with your old 401(k) accounts? You may prefer to roll your old 401(k) over to an IRA, as it gives you the ability to invest your account in a variety of mutual funds, stocks or bonds beyond what your employer may offer. This helps you to build a well-diversified investment allocation. Choosing low-cost mutual funds or ETFs in an IRA can save you money in the long-term over generally more expensive 401(k) investment fees.

For easier management, some may consider consolidating an old 401(k) account with a new one. First, you need to research what investment options your new plan offers. It is common that employer-offered 401(k)s have a smaller number of investment options than an IRA. For example, emerging markets equity funds and small-capitalization value funds are rarely offered.

Then you should compare the underlying fees and expenses in your plan with those in an IRA. The operating expense ratios of the available options can often be higher. Finally, talk to your new 401(k) plan administrator to guide you through the steps for a rollover.

No matter where you are in your working life, retirement savings probably comes in low on your list of financial priorities. After all, you’re busy building your life and career. You have to cover the basics like mortgage, cars, utilities, insurance, and healthcare; then meet the demands that life brings like kids, college, unexpected accidents, and rising costs of just about everything. How are you supposed to focus on long-term goals when short-term responsibilities get in the way?

Most people can relate to that challenge. Did you know that 85% of working age people in a worldwide retirement survey1 said that retirement is not their main savings priority? So what can you do now to save consistently for the future? These tips may seem obvious, but they’re tried and true ways to develop a serious savings habit:

Make saving automatic.

With so many things to manage in life, apps and devices have become an essential tool to ease our everyday burdens. It only makes sense to use digital automation when it comes to retirement savings. Sign up for payroll deduction to effortlessly contribute to your employer’s 401(k) or other plan. If you have a Traditional or Roth IRA, set up an automatic sweep or periodic deposit that ensures you make the annual contribution limit. Don’t have a retirement account? Arrange for automatic transfers into your savings account through online banking.

Everyone knows you can’t expect to live comfortably in retirement without thoughtful planning, right? Not quite. A recent global retirement survey by HSBC found that nearly two-thirds of retirees didn’t know they were financially unprepared until after they retired.* That’s a lot of people worldwide who didn’t realize the consequences of poor planning until hindsight provided an unsettling view.

We all tend to put up our own roadblocks when it comes to preparing for retirement. But, meaningful insight from an experienced financial advisor can help change the way you think about long-term planning. Consider your reasons for putting off saving for retirement, and see how professional guidance can change your perspective:

You think you’re too young to start planning.

Retirement seems light years away when your adult life and career are just taking off. But, the earlier you get started, the easier it is to save over time. Putting away even small amounts consistently, taking advantage of employer retirement plans, and sticking to a budget greatly increase your chances of saving enough. Get to know an advisor who can help you make sense of your finances early on.

Infinity Financial Services

Infinity Financial Services is a Registered Investment Advisor and a member of both the Financial Industry Regulatory Authority (FINRA®) and the Securities Investor Protection Corporation (SIPC). Infinity Financial Services does not conduct investment advisory or securities business in states that are not currently registered. For a list of current state registrations, call 888-888-5321.